Three High-Tech Shares with Potential to Turn You into a Millionaire
The tech sector has produced numerous millionaires over time, yet it's also left some investors disappointed due to misguided investments. To find the next tech stock that could mint millionaires, investors should focus on companies boasting unique advantages, high growth rates, and resilient business models.
Three such high-growth tech stocks promising substantial returns are: SoundHound AI (SOUN 0.89%), SentinelOne (S 1.91%), and Cloudflare (NET 0.33%). Let's examine why this trio could potentially deliver exponential gains over the coming years.
1. SoundHound AI
SoundHound AI specializes in developing voice and audio recognition technologies. Its popular app identifies music by playing brief clips or humming a few notes, while its Houndify platform allows businesses to develop tailored voice recognition apps. Companies like Hyundai, Vizio, and Church's Chicken employ Houndify to create custom speech recognition tools unaffected by ties to larger data-mining tech companies.
SoundHound's revenue surged by 47% in 2022 and 2023, and it forecasts 79%-85% growth in 2024 and 86%-110% growth from the midpoint estimate in 2025. This optimistic trajectory is attributed to both organic growth and recent acquisitions, such as restaurant technology provider SYNQ3, food ordering platform Allset, and enterprise AI software maker Amelia. In addition, SoundHound collaborates with AI chatbot maker Perplexity to improve its large language models and integrate its voice recognition tools into Nvidia's Drive automotive platform.
Although SoundHound is yet to turn a profit and its stock is priced at 14 times next year's sales, its hypergrowth could generate substantial profits as the generative AI market expands. This could possibly explain Nvidia's ownership of this budding company.
2. SentinelOne
SentinelOne is a cybersecurity company aiming to automate human analysts using AI-driven algorithms. The company believes this method is more efficient, accurate, and error-free. Its Singularity extended detection and response (XDR) platform integrates on-site appliances and cloud-based services.
The effectiveness of SentinelOne's AI-powered approach has captured the attention of numerous companies. Its revenue more than doubled in fiscal 2021, 2022, and 2023 (ending January 2023). Its dollar-based net revenue retention rate also increased from 117% in 2021 to 132% in 2023. However, for 2024, revenue growth slowed to 47%, and its dollar-based net revenue retention rate dipped to 114% due to deceleration in growth of its larger customers.
For fiscal 2025, SentinelOne anticipates revenue growth of 31%. Despite the market turbulence, its investors were spooked by this slowdown, sending its stock below its initial public offering price. However, SentinelOne now appears more fairly valued at 8 times next year's sales, and with continued growth in AI-powered cybersecurity solutions, it could potentially grow more substantial over the next decade. It might also be an appealing acquisition target for larger cybersecurity companies.
3. Cloudflare
Cloudflare ranks among the world's leading providers of cloud-based content delivery network (CDN) services, ensuring quick delivery of digital media for websites. CDNs enhance media delivery by storing cached copies of digital content on edge servers, located closer to website visitors than the origin servers. Cloudflare also fortifies websites against bot-based attacks with tools for human verification.
Cloudflare's revenue skyrocketed by 50% in 2020, 52% in 2021, and 49% in 2022. However, in 2023, revenue expansion slowed to 33% due to the market downturn, causing many companies to scale back their spending. Its dollar-based net retention rate also slid from a record high of 125% in the fourth quarter of 2021 to 115% in the fourth quarter of 2023. For 2024, Cloudflare estimates revenue growth of 28%. Analysts expect its revenue to rise by 26% in 2025.
Although Cloudflare continues to face challenges in securing larger deals during this challenging market period, it's growing at a faster pace than its competitors like Fastly and Akamai. It's still not turning a GAAP-profit, but analysts predict its adjusted earnings per share to expand by 52% in 2024 and 15% in 2025. Although it's not inexpensive at 15 times this year's sales, the growing demand for its services is likely to persist as internet speeds improve, more companies launch media-focused websites, and bot attacks become more prevalent.
Based on the provided text, here are two sentences that contain the words 'finance', 'investing', and 'money' with context:
- Investors who are interested in the tech sector and are looking for potential investment opportunities might consider SoundHound AI, SentinelOne, and Cloudflare, as their robust growth and unique advantages could potentially generate substantial returns in the finance world.
- Considering the financial performance and growth potential of these high-growth tech stocks, cautious investing strategies that consider the price-to-sales ratio and market trends could help investors navigate the risk-reward landscape in the tech financing sector.
